A plan by trader Mike Wekerle and his partners to turn a shell company into a new technology merchant bank is creating a little excitement, with shares of the shell jumping more than 50 per cent on the news.
Mr. Wekerle left GMP Capital last year after a long career there as head trader. His first plan, to join up with asset manager Galileo Global Equity Advisers, fell through amid disagreements about how the partnership should work.
With partners Paul Sparkes and Henry Kneis, he then started a new firm called Difference Capital. Difference has plans to launch hedge funds and get involved in the tech business, which Mr. Wekerle believes is unduly ignored and due for a resurgence.
The hope for TriNorth is to raise as much as $120-million to invest in technology firms, and to provide advisory services to companies in the industry. Difference is buying slightly less than half of TriNorth for $4.52-million, which works out to 3 cents a share at current prices, in large part because the company has $160-million in tax losses that can be used to shelter future profits. TriNorth will be renamed Difference Capital Funding if the deal goes through. Thursday, the stock traded as high as 6 cents a share.
Early in Mr. Wekerle's GMP career, the firm had a strong focus on technology stocks -- for example, it was the first investment bank to finance Research In Motion Ltd. Mr. Sparkes has a background in media, having worked at television network CTV.
In addition, Mr. Wekerle said he has lined up a group of technology executives to work with Difference. U.S. financier Anthony Forstmann is also an adviser. Mr. Forstmann is a pioneer in the hedge fund and private equity business in the U.S.
“For the better part of 10 to 12 years, the alternative investment industry has been absent” from the technology space in Canada, Mr. Wekerle said in an interview. “There's a growing need among constituents in that sector.”